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Overseas remittances by Indian residents are on the decline. Under the Liberalised Remittance Scheme (LRS), outward transfers dropped to $2.3 billion in May 2025, down from $2.5 billion in April. This continues a broader downward trend, with average monthly remittances falling from $2.8 billion in FY24 to $2.5 billion in FY25.
According to a report by Times of India, multiple factors are contributing to this slowdown. Education-related transfers have been impacted by stricter visa regulations in key destination countries. At the same time, the government has stepped up scrutiny of fund outflows, particularly those made under the ‘gift’ category as part of a wider effort to limit capital flight.
In recent months, authorities have tightened the rules governing remittances. A tax collected at source (TCS) now applies to foreign transfers and any funds sent abroad must be used within 180 days or returned. This has made it harder for individuals to park idle funds in overseas accounts. Restrictions on overseas investments by mutual funds have also narrowed investment options.
The decline in remittances during May was widespread. Equity and debt investments fell sharply from $203 million in April to $105 million. Funds sent as gifts dropped from $291 million to $233 million. Transfers for the upkeep of close relatives abroad slid to $323 million from $398 million. Spending on education and foreign real estate also slowed.
Even travel, which had seen a post-pandemic rebound, is beginning to show signs of moderation. Outflows for international travel rose slightly from $1.3 billion in April to $1.4 billion in May, but the pace of growth has eased compared to previous months.
Impact Shorts
More ShortsAcross nearly all categories, remittance volumes fell in May, pointing to a combination of regulatory tightening, limited investment opportunities, and shifting global conditions affecting Indians’ overseas spending patterns.